Discuss About The Contract Management For Large Projects Nsw.
The AS 4120-1994 premier code to guide tendering for projects that involve the use of public funds, prepared by the Standards Australia Committee on Construction Industry Practice and supersedes the AS 4120 (Int) 1993, Code of tendering. The AS 4120-1994 sets out and defines the obligations and ethics of the tenderers and principal in the construction industry tendering process. The AS 4120-1994 applies to the code for selecting contractors as well as sub-contractors. The Standard aims at encouraging high levels of ethical standards in tendering within the construction industry with the belief that higher productivity, elimination of malpractice, better working conditions, and high quality construction work will be achieved as a consequence.
Accountable officer: This is the person responsible for a project under section 65, 66, and 67 of the financial Act 2009
Agency: refers to a statutory body or department as defined in financial accountability act
Client: the person inviting potential bidders to bid for a construction contract
Tenderer: The person expressing their bid to win and undertake a given construction project
The contractor will undertake the construction project with fairness, efficiency, integrity, and impartiality and will expect those that they deal or collaborate with to do the same. The information provided by the tenderers must be accurate and based on trust, with a focus on delivering the best value for the client, including in the tendering process. The standards of environmental practices as well as those of the OHS must be maintained by all parties, and responsible industrial relations must be encouraged and practiced at all times. This tender is governed by the ethical principles of fairness, reliability, fair reward, integrity, objectivity, service, and accountability
Obligations of the Principal:-
The principal must ensure that the process of tendering meets the ethical standards and that the stated conditions and requirements are what is actually required for the benefit of the client as define in the AS 4120-1994
Project definition
This tender is for a project involving the construction of a thermal power generation plant in NSW; at the Western South Wales region with sufficient sunlight
Tender documents
The tender documents will be available from the offices of ARENA (Australia Renewable Energy Agency) and can be downloaded from the online portal for ARENA at no cost. The participants must fill in the tenders fully, in compliance with the law, and fulfilling all requirements, including the AS 4120-1994 for construction projects tendering
Selecting tenders
All those that qualify, and meet the requirements as set in the tender documents on technical capacity, experience, legal compliance, as well as the financial compliance for the tender are eligible to participate in this tender, either as single entities or as a joint team of tenderers.
Call for tenders
This invitation to tender is an open tender that has been advertised in various media, including newspapers, and on the ARENA website for interested bidders to apply. The tender is accompanies by a pre-qualification of tenderers which all bidders must fill and ensure they are qualified to be considered for this tender, either as single entities or as a joint venture
Tendering method
The preferred tendering method is that of open tendering; which is the most preferred method involving public tenders. It also gives all qualified tenders a chance to tender and fulfills the requirements of the AS 4120-1994 as well as public procurement laws.
Tendering inquiries
All enquiries regarding this tender can be addressed to the Principal whose address will be provided or to the ARENA office for any clarifications, specifying which area they would like an enquiry. Further, before submission of the tender, all bidders will be free to ask for any clarification before any tender document is submitted.
Any amendments to tender documents can be done by the client (ARENA) with a fulfillment of the existing tender rules at any time; all bidders must submit their tenders, together with a copy of any of the amendments made. In case tenders have already been submitted and an amendment is made, this will be communicated duly to all the qualifying tenderers (shortlisted bidders). All amendments will also be duly communicated to all bidders that collected tender documents
Receipt of tenders
The duly filled tender documents will be received at the client’s offices located on the attached address not later than the tender closing dates. All tender submissions must be in electronic form and clearly marked with the tender number, with the details of the bidder on the envelope. The tenders will be submitted together with any amendments made to the tender requirements
Closing of tenders
The closing for the tender for submissions is stated clearly [ ] and any tenders delivered after NOON of the tender closing date will not be considered
Once submitted, all the tenders will be opened in the presence of the bidders or any of their agents; the evaluation will be done based on the set criteria with scores awarded based on the feedback of the tender review committee. The highest performing bidder or consortium will be awarded the tender and informed in writing, with all non-qualified bidders also being informed of the decision upon completion of the tender review phase. The tenders are to be evaluated based on the following criteria;
Negotiation and selection
The qualified bidders will be asked to come for a meeting during which further discussions and negotiations will be made. The negotiation phase will ensure all issues are ironed out, including financing and payment methods, with the qualified bidder invited to raise any enquiries. Upon agreement, a formal offer and binding contract will then be signed with the winning tender bidder to set the stage for the construction works
Genuine belief
As per the requirements and standards stipulated in the AS 4120-1994, all tenderers must only submit tender documents if they genuinely believe that they possess the capacity, competence, and resources to undertake the tasks under the tender contract. The Principal may require that the tenderers attest to whether they have gotten into agreements or contracts with other tenderers
Return of documents
Evaluation of tender documents
The documents will be evaluated based on merit and fulfillment of the specified tender requirements, and how well the tenderer has complied with, and filled the document. Al tender documents that fail to adequately fulfill any of the stated conditions will be rejected. Only people with the requisite skills and qualifications will be allowed to evaluate the tender. All proposals providing extra innovations will be considered, but only if fulfilling the wider requirements of the tender document. The evaluation will follow a seven step process that includes;
1-Cursory review of documents for completeness and accuracy
2-Tender ranking based on qualitative assessment as received
3-Tender ranking in order of priority
4-Selection of three tenderers providing best value and closest match for the tender requirements
5-Determination of total costs for the project for the tenderers selected in stage 4
6-Selection of tender offering the best value to the Principal
7-Confirmation with the preferred tenderer on their capacity and ability to deliver on the project
Project labour
The tenderer must show how they will acquire and retain skills and knowhow, and their knowledge management as well as the suitability of their staff to the contract requirements. Further, the labor management must comply with the requirements of the Principal
Project plant
The tenderer must develop a suitable project plant at a location within Western NSW at a location that can harness the maximum amount of solar energy and does not adversely affect existing social, economic, and environmental systems. The tenderer must acquire other requisite raw materials to operate the plant as well as other necessary materials for logistics, storage, and operation, circulating water must be discharged safely and efficiently; it is preferred if it can be recycled.
Project materials
The materials required for the project are defined as per the table below;
Description Weight
Site clearance and excavation works 0.15
Structure and discharge of circulating water system 0.2
Land management 0.15
Intake canal for circulating water 0.12
Underground utility and safety location (for fire) 0.18
Crashing and batching plant 0.2
The Principal understands that this tender is complex and will require sub-contractors; subcontractors play a major role in ensuring the success of projects and delivering specialist services and products. The winning tenderer will ensure all the subcontractors they use meet the minimum stipulated requirements for contractors, and are duly registered with the authorities and with their respective industry associations. The contractor will ensure the subcontractor meets the requirements of the AS 4120-1994 and have the capacity to meet their subcontracting work, including technical, financial, human resources financial, and performance requirements
All tenderers will submit the details of the subcontractors to be involved in the project and all tenders must be submitted in electronic form, as per the stated deadline
The tenders submitted will be handled confidentially; the review committee as well as the Principal will observe ethical guidelines, including those stated in the AS 4120-1994 to ensure the highest ethical and confidential standards is met. The tenders must also ensure they maintain confidentiality of the negotiations and interactions with the Principal. The tender committee, for instance, are prohibited, and will not use the prices offered by competing tenderers as a negotiation base for the contract prices.
Source of funds, i.e. capital funds or operational expenses
Given the scale and scope of the tender, and will use the non-resource, limited financing model attained by the use of a different financing vehicle. The Principal will provide a grant for the tender, after which the tenderer will be required to source for, and build the project on the basis on build-operate-transfer model (BOT). This is a financing model in which private funds are used through a concession sourced from either private or public sources (or both) to finance, design, build (construct), and operate a given facility as stated in the contract.
Project selection criteria
The project is selected based on the criteria of value addition, ability to meet energy demands, and reduction in emissions caused by using alternative sources. Most of power generation in Australia is generated through coal, which poses health and environmental risks, as well as not being renewable.
Nature of Contract
The nature of the contract is that of EPC (Engineering, Procurement, Construction), which is the most suitable form of contract involving complex public projects for infrastructure.
Service of Notices
All notices between the parties will be done through agreed channels, with the content of the notice clearly marked. Notices shall be done according to the general rules and regulations governing the contract
Assignment and Subcontracting
The winning tenderer will be responsible for managing the subcontractors and agreements with the subcontractor to ensure the project objectives are met within budget, time, and scope.
Statutory Requirements
The tenderer must obtain and submit a bid bond and demonstrate insurance and sound financial backing before participating in the project; all legal litigations, past and present, against the tenderer must also be stated and should have been amicably resolved. Tenderer must be a duly registered organization with valid practicing licenses and certificates
Examination and Testing
The Principal will nominate entities to examine and test the plant as well as the installed thermal solar power plant to ensure compliance with requirements and project deliverables. Testing will be done to verify the test results submitted by the tenderer
The progress of works will be inspected periodically to ensure they are on schedule and meet the required performance and quality standards.
Suspension of the Works
The works may be suspended if the contractor fails to deliver on milestones as per the schedule, or there is a major legal challenge occasioning the suspension of works, including the declaration of the tenderer as being bankrupt. In the event the tenderer is unable to deliver on the contract as per the signed contract, for instance due to lack of financing, the works can be suspended, or if there is an adverse effect to the environment, communities, or economy of the location of the contract.
Delay or Disruption Costs
Where the tenderer is responsible, they will bear the costs for any delays or disruptions
Defects Liability
The tenderer and subcontractors bear the responsibility for defects during the construction ad upon contract completion. The client and Principal will not bear any costs or liability for defects
Variations
The contractor must not vary the work as stipulated under the contract except, as may be directed by the Superintended or a signed approval obtained from the Superintendent, in writing. However, a variation falling within the general scope of the contract can be executed by the contractor. No variations will be executed upon completion of works, and the contractor will be reimbursed by principal for reasonable costs of variations initiated by Superintendent
Certificates and Payments
Payments for payments authorized by the Superintendent and duly payable to the contractor, including for costs of variations will be paid strictly according to the contract terms and conditions.
Default or Insolvency
The contract shall be liable to the new insolvency laws which imply that ipso facto clauses are not enforceable under certain procedures for insolvency. The Principal will not rely on the insolvency event of a contractor to enforce the common ipso facto clauses or terminate the contract, and the dispute resolution mechanism will instead come into play (Ryan, Hammond, Hill, & Smoktunowicz, 2018; Kelly & Harding, 2017).
Termination
The contract can be terminated if the contractor legally becomes insolvent and the case is determined in a court of law, or if there are repudiatory breaches, and if a contract termination clause specified in the contract is triggered. Remedies include rescission, specific performance, and damages (Legal Vision Australia, 2017; CCH Australia Limited, 2010)
All claims will be managed through h the contract terms and available laws and regulations governing the contract. The contract must submit clear and accurate contract claims. Claims will be processed fairly and with speed with assessments for claims being reasonable and fair (Levy, 2010) and as per AS 2140-1994 guidelines
Every endeavor must be used by all parties to the contract to solve disputes; the contract governing the construction project must be written in a clear and concise manner, avoiding any ambiguity. The contract should be clear on how disputes are to be resolved. The preferred method of dispute resolution is arbitration where all parties present arguments as well as evidence to a practitioner of dispute resolution who is the arbitrator in the issue and who makes a determination (Australian Disputes Center, 2018). It is the best method in terms of saving costs, collaboration, and reaching a mutually agreeable settlement (Gerber & Ong, 2013; (Jones, 2013)
Customer quality focus
All parties must sign up to, and adhere to quality management practices and principles in the project as an effective response to managing risks. The project manager must ensure quality is assured
Quality leadership
The project manager will work with a team to ensure quality assurance and control through various quality management tools and techniques.
Involvement of people
All team members involved in the project, as well as contractor and Principal must make a commitment to adhere to the quality management and ensure overall project quality
Process approach
Quality process approach will be achieved through the various ISO standards, including ISO 9001and ISO 9004. The process approach is among the eight principles upon which the ISO standards are founded and follows the following steps;
1-Establishing responsibilities for managing the process
2-Defining process
3-Identifying customer requirements
4-Establish how process performance will be measured
5-Compare performance of process with requirements of the customer
6-Identify opportunities for process improvement
7-Improve process performance (Hooper, 2011; Neyestani, 2016; (Leong, Zakuan, & Saman, 2012)
The systems approach encompasses a holistic view of the project, with all elements and aspects viewed as being parts of a whole that influence each other and influence and are also influenced by internal and external factors (Rumane, 2018; Construction Specifications Institute, 2013)
Continuous improvement
The project quality will follow the principles of lean and kanban to attain continuous improvement through regular reviews; this requires organizational learning and knowledge management to be undertaken continuously for learning as the project is undertaken, through a systems thinking approach. Knowledge will be captured and reused as the project proceeds (Tan, 2010; green, 2011)
Mutual benefit
The outcome must be of mutual benefit to Principle and contractors as well as to the public and environment
The safety management review will be undertaken to ensure the safety policies in place meet the OSH requirements. A workplace health and safety (WHS) policy will be implemented to ensure safety of all people involved in project (Qi, Shen, & Dou, 2013
5.2 Safety measurement and evaluation
The WHS document and policy will be used for measurement and evaluation of safety
5.3 Safety implementation
The safety officer and project manager will implement the WHS safety policy document developed for the organization and review it regularly (Qi, Shen, & Dou, 2013
5.4 Safety planning
The planning for safety will include training and sensitizing all staff on the WHS policy document and reviews done as per the safety policies
The organization will have an OHS policy defining the roles of safety officer, safety regulations, their implementation, and reviews and reporting. This will define work allocation and duration, safety measures including notices, first aid, and steps to follow in the case of a safety event. Policy must be reviewed regularly (Business Australia, 2018)
References
Australian Disputes Center. (2018). Arbitration. Retrieved from https://www.disputescentre.com.au/arbitration/
Business Australia. (2018, May 22). Work Health and Safety (OHS) acts, regulations and codes of practice. Retrieved from https://www.business.gov.au/info/run/workplace-health-and-safety/whs-oh-and-s-acts-regulations-and-codes-of-practice
CCH Australia Limited. (2010). Australian consumer credit news. North Ryde, NSW: CCH Australia.
Construction Specifications Institute. (2013). The CSI construction product representation practice guide.
Gerber, P., & Ong, B. (2013). Best practice in construction disputes: Avoidance, management and resolution. Chatswood, N.S.W: LexisNexis Butterworths.
Green, S. (2011). Making sense of construction improvement. Chichester, West Sussex: Wiley-Blackwell.
Hooper, H. (2011). The process approach to QMS in ISO 9001 and ISO 9004. Retrieved from https://asq.org/quality-progress/2001/12/standards-outlook/the-process-approach-to-qms-in-iso-9001-and.html
Jones, D. (2013). Commercial arbitration in Australia. Pyrmont, N.S.W: Thomson Reuters (Professional) Australia Ltd.
Kelly, A., & Harding, C. (2017, November 3). New insolvency laws to impact construction contracts – Construction Blog. Retrieved from https://www.tglaw.com.au/construction/2017/11/01/53/
Legal Vision Australia. (2017). Contract Termination | Free Legal Information | LegalVision. Retrieved from https://legalvision.com.au/contract-termination/
Leong, T. K., Zakuan, N., & Saman, M. Z. (2012). Quality Management Maintenance and Practices-Technical and Non-Technical Approaches. Procedia – Social and Behavioral Sciences, 65, 688-696. doi:10.1016/j.sbspro.2012.11.185
Levy, S. M. (2010). Construction process planning and management: An owner’s guide to successful projects. Amsterdam: Butterworth-Heinemann.
Neyestani, B. (2016). Effectiveness of Quality Management System (QMS) on Construction Projects. SSRN Electronic Journal. doi:10.2139/ssrn.2960422
Qi, E., Shen, J., & Dou, R. (2013). The 19th International Conference on Industrial Engineering and Engineering Management. Berlin: Springer.
Rumane, A. R. (2018). Quality management in construction projects.
Ryan, S., Hammond, L., Hill, P., & Smoktunowicz, S. (2018, April 18). Insolvency In Construction: What Does This Mean For Your Contract? – Insolvency/Bankruptcy – UK. Retrieved from https://www.mondaq.com/uk/x/693220/Insolvency+Bankruptcy/Insolvency+in+construction+What+does+this+mean+for+your+contract
Tan, H. C. (2010). Capture and reuse of project knowledge in construction. Chichester, U.K: Wiley-Blackwell.
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